Ardelyx(ARDX) - 2024 Q2 - Quarterly Report

Financial Performance and Revenue Growth - Total revenue for Q2 2024 increased by 228% to $73.2 million compared to Q2 2023, driven by strong product sales[152] - Product sales for IBSRELA increased by 94% to$ 35.4 million in Q2 2024 compared to Q2 2023, driven by increased demand[153] - XPHOZAH contributed $37.1 million in product sales in Q2 2024, following its launch in Q4 2023[153] - Cost of product sales increased by$ 913 million (186%) for the three months and $1,554 million (180%) for the six months ended June 30, 2024, compared to the same periods in 2023, primarily due to increased net product sales of IBSRELA and XPHOZAH[157] - Other cost of revenue increased by$ 5,034 million (168%) for the three months and $9,984 million (240%) for the six months ended June 30, 2024, driven by increased payments to AstraZeneca under the AstraZeneca Termination Agreement[158] - Non-cash royalty revenue of$ 599,000 in Q2 2024 is attributable to royalties from Kyowa Kirin for sales of PHOZEVEL in Japan[155] Product Development and Approvals - IBSRELA, a first-in-class NHE3 inhibitor, was first sold in the U.S. in March 2022[124] - XPHOZAH, a phosphate absorption inhibitor, was approved by the U.S. FDA on October 17, 2023, and first sold in the U.S. in November 2023[126][127] - XPHOZAH was granted orphan drug designation by the U.S. FDA for pediatric hyperphosphatemia in November 2023[129] - XPHOZAH received FDA approval in October 2023, triggering a $3.0 million milestone payment received in Q1 2024[136] - Kyowa Kirin approved tenapanor for hyperphosphatemia in Japan, resulting in$ 30.0 million in milestone payments and an additional $5.0 million under the HCR Agreement, received in October 2023[177] Partnerships and Collaborations - Ardelyx has commercial agreements with Kyowa Kirin in Japan, Fosun Pharma in China, and Knight in Canada for tenapanor[130][131] - Knight paid Ardelyx a$ 2.3 million non-refundable payment in March 2018 and may pay up to CAD 22.2 million in milestones[132] - Kyowa Kirin paid Ardelyx $30.0 million upfront and may pay up to$ 55.0 million in milestones, with $35.0 million received as of June 30, 2024[133] - Fosun Pharma paid Ardelyx a$ 12.0 million upfront license fee and triggered a $2.0 million milestone payment in July 2023[135] - Fosun Pharma received approval for tenapanor in Hong Kong, potentially entitling the company to up to$ 113.0 million in milestones, with $8.0 million recognized as revenue by June 30, 2024[136] - The company received a$ 10.0 million upfront payment and a $5.0 million milestone payment from HCR under the HCR Agreement, recorded as a deferred royalty obligation[148] Financial Position and Cash Flow - Ardelyx's accumulated deficit as of June 30, 2024, is$ 889.2 million[121] - Cash and cash equivalents increased by $20,420 million (95%) to$ 41,890 million as of June 30, 2024, compared to December 31, 2023[172] - The company sold 16.8 million shares of common stock under the 2023 Open Market Sales Agreement, receiving gross proceeds of $70.0 million at a weighted average sales price of$ 4.17 per share[173] - The company entered into a Third Amendment to the 2022 Loan Agreement, allowing it to draw an additional $50.0 million of committed capital by March 15, 2024 (Term C Loan) and up to$ 50.0 million of uncommitted capital (Term D Loan), with the interest-only period extended to December 31, 2026[176] - The company's accumulated deficit as of June 30, 2024, is $889.2 million, with primary cash sources including stock sales, collaboration partnerships, and loan agreements[178] - Cash flow from operating activities decreased by$ 4.4 million (7%) in the six months ended June 30, 2024, compared to the same period in 2023, primarily due to adjustments in net loss reconciliation and changes in operating assets and liabilities[185] - Cash flow from investing activities increased by $89.9 million (130%) in the six months ended June 30, 2024, compared to the same period in 2023, driven by the timing of investment maturities and purchases[186] - Cash flow from financing activities decreased by$ 7.9 million (13%) in the six months ended June 30, 2024, compared to the same period in 2023, largely due to the absence of proceeds from the 2021 Open Market Sales Agreement, offset by $49.8 million from the Term C Loan[187] - As of June 30, 2024, the company had$ 186.0 million in cash, cash equivalents, and short-term investments, consisting of bank deposits, money market funds, and high-quality fixed-income instruments[189] Operating Expenses and Costs - Total operating expenses increased by $41,948 million (118%) for the three months and$ 69,625 million (98%) for the six months ended June 30, 2024, compared to the same periods in 2023[160] - Research and development expenses increased by $4,480 million (54%) for the three months and$ 5,966 million (34%) for the six months ended June 30, 2024, primarily due to increased engagement with scientific communities and clinical trial activities[162] - Selling, general and administrative expenses increased by $37,468 million (138%) for the three months and$ 63,659 million (118%) for the six months ended June 30, 2024, driven by the commercialization of IBSRELA and XPHOZAH[163] - Interest expense increased by $2,251 million (209%) for the three months and$ 3,579 million (170%) for the six months ended June 30, 2024, due to a larger loan balance and higher variable interest rates[165] - Non-cash interest expense related to the sale of future royalties increased by $608 million (63%) for the three months and$ 1,341 million (69%) for the six months ended June 30, 2024[168] - Other income, net increased by $599 million (39%) for the three months and$ 1,636 million (57%) for the six months ended June 30, 2024, due to higher investment income[170] Market and Patient Data - Approximately 550,000 adult patients with CKD on dialysis in the U.S., with 80% treated with phosphate-lowering therapies[126] - 70% of patients treated with phosphate binders were unable to maintain phosphorus levels ≤5.5 mg/dL over six months[126] Royalties and Licensing Agreements - AstraZeneca is entitled to 10% royalties on net sales of tenapanor and 20% of non-royalty revenue, with $40.2 million recognized as other cost of revenue to date[143] - Non-cash royalty revenue of$ 599,000 in Q2 2024 is attributable to royalties from Kyowa Kirin for sales of PHOZEVEL in Japan[155] Inventory and Cost of Goods Sold - Cost of goods sold for Q2 2024 would have been $1.2 million higher if certain material and production costs had not been previously expensed[142] - The company had$ 19.6 million of inventory on hand as of June 30, 2024, previously expensed as R&D, which will not be reported as cost of goods sold in future periods[142] Loan Agreements and Interest Rates - The company's 2022 Loan Agreement bears interest at a floating rate of 7.95% plus the greater of 1.00% or 0.022% plus the 1-month CME Term SOFR rate, with a hypothetical 100 basis point increase in SOFR raising interest expense by $0.3 million for the six months ended June 30, 2024[190] Foreign Currency Risk - The company is exposed to foreign currency risk due to transactions denominated in Swiss francs and euros, though it does not use derivative financial instruments for speculative purposes[191] - The company had no open forward foreign currency exchange contracts as of June 30, 2024[192]